Diakonos Group Chief Financial Officer Jason Bush is used to jumping through hoops when it comes to obtaining financing. The Diakonos Group has worked with Cambridge Realty Capital on a number of HUD loans throughout the years according to Cambridge Senior Managing Director Sampada D’silva, and Bush recalled the process as exacting. But his recent IRR loan was, in contrast, “so much better.”
Cambridge has a strong relationship with Diakonos dating back several years. The Diakonos Group is based in Oklahoma and specializes in the turn-around and re-development of underperforming care facilities. Diakonos’ first worked with Cambridge on bridge loans for two properties that it had recently purchased in Oklahoma and were in the process of rehabilitating. At the time, Diakonos CEO Scott Pilgrim hoped that the bridge loans would allow the company to get the facilities back on track and to a place where they would be eligible to later apply for HUD loans. Pilgrim remembers that it was a busy time and “there were a lot of puzzle pieces to put together” to make those deals possible. Cambridge President Jeffrey Davis recalls that Diakonos had a solid business plan and “we were confident in the company’s ability to rehabilitate the properties.” Diakonos was eventually able to apply for and was granted HUD loans for the two properties through Cambridge.
Fast forward to 2020, and interest rates have dropped due to the global Covid-19 pandemic. A number of Cambridge borrowers have been able to take advantage of this decrease through IRR, including the Diakonos Group. “We quoted a deal to Diakonos in March 2020 and closed in June 2020 to take advantage of the drop in prepayment penalty,” D’Silva reported. “The normal IRR process is usually faster; it usually takes around 45 days to close. We waited on this one for the prepayment penalty to drop and closed post that drop.” In addition to the reduced prepayment penalty, “Cambridge was able to help Diakonos reduce its interest rate on its two properties,” D’silva said.
As for Bush’s role in the IRR process, “There is pretty much minimal involvement on my part. Basically, it just involved the lawyers and other people for going through the process,” Bush stated. “So, for me, the IRR program is great as it allows me to concentrate on other company activities while possibly getting our interest rate reduced. It’s pretty much a win-win situation for the client.”
D’silva noted that Cambridge Realty Capital closed a total of 16 IRR loans in the first half of 2020, including the loans to the Diakonos Group. While the pandemic has been incredibly challenging for care home operators, the IRR program has been able to provide at least a small measure of relief to operators whose resources have been taxed to the limit over the last year. The 16 loans represent a total of $205,373,431 in funds.